Problems of Bank Bailouts

Readers Questions: do you agree with bank bailouts why ?or why not?

I wrote here: Why we need to bailout the banks

The Great Depression was so severe because of the scale of banks who went bankrupt. Banks may not deserve to be bailed out, but, it was a necessity.

The big question is how to bailout the banks. For example, the Paulson plant and Greitner plan have involved purchasing of ‘toxic assets’ rather than taking public ownership.

I have never really evaluated all the detail of these plans. But, my feeling is that this is an expensive and inefficent way to bailout the banks.

You will get more detailed analysis here:

Financial policy despair - Paul Krugman

“…Question: what happens if you lose vast amounts of other people’s money? Answer: you get a big gift from the federal government — but the president says some very harsh things about you before forking over the cash….” Bailout for Bunglers

• UK Bank Bailout
• Markets fear scale of bank bailout